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UK Rents Up 6.2% Annually, Expected to Rise Further

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    ONS Data Reveals Joint-Highest Annual Percentage Change in UK Private Rents

    The Office for National Statistics (ONS) recently published its Index of Private Housing Rental Prices (IPHRP) for January 2024. This price index tracks the rental costs taken on by tenants when renting from private landlords in the UK and is released on a monthly basis.

    These official figures show that rents rose by 6.2% in the UK private rental market in the 12 months to January 2024. This rate is unchanged since November 2023, making it the joint-highest yearly percentage change since this data series began in January 2006.

    The continuous increase in the annual inflation rate started in the second half of 2021 when yearly growth was observed in all areas except London. Then, in 2022, the annual percentage change increased across all regions, and this generally continued throughout 2023.

    The ever-climbing rents are good news for those considering a buy-to-let investment, as rental income is likely to be high.

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      Rental Inflation by Regions

      Over the past twelve months, private rental prices increased in all UK countries. In England, there was rental growth of 6.1% (or 5.7% when London was excluded) in the year to January 2024. This is the same as the month before, as December also registered an annual rise of 6.1%. These two figures are the joint-highest annual changes since the data series began in January 2006.

      London was the English region with the highest yearly rental growth over the last year, with 6.9%, while the North East experienced the lowest rental inflation of 4.7%.

      However, according to Zoopla, London and some other parts of South England have already moved past peak growth as rents start to hit a ceiling of affordability for renters in these areas. Sky-high rents coupled with the cost-of-living crisis are becoming unviable for the average tenant.

      Meanwhile, Zoopla states that there is room for further growth in rental markets in other regions. Regarding newly available property rents, the property portal found that the North West experienced the most significant annual percentage increase in England of 10.8% in 2023.

      Further Reading: If you need help calculating your investment costs, take a look at our Scottish stamp duty calculator or UK interest rates chart.

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      Are Rental Prices Projected to Continue Going Up?

      According to the RICS, there was an increase in tenant demand reported in the three months to January. However, there was a lack of new landlord instructions, meaning the supply-demand imbalance in the private rental sector looks set to continue, pushing rental prices higher in the next few months.

      The IPHRP tracks price changes for all private rental properties. This includes long-term rentals and not just newly advertised ones, which is why other indexes have shown sharper rises, reflecting the supply-demand imbalance. But the effects of the ongoing undersupply are still clearly shown in ONS figures; it can just take more time to be revealed.

      Learn More: To find out more about the UK property market, take a look at some of our latest buy-to-let area guides covering topics like buy-to-let property in Cambridge and investment property in York.

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      Jessica Ferris

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      Jessica is a property content writer at RWinvest. Keeping a close eye on the UK property market, Jessica helps our readers stay informed and up to date on the latest market news and statistics.